Brunello Cucinelli is well known for his cultured and philosophical approach to life. But he certainly doesn’t lack intellectual honesty or caution when expressing his views. The current slowdown in a certain segment of the luxury market doesn’t surprise him—in fact, he tells the Financial Times he considers it “inevitable”, coming as it does at the end of a long period of growth in the new millennium, culminating in the post-Covid boom. According to him, companies focused too heavily on profits and left customers facing a stark choice: “Spending thousands of euros on garments that everyone else owns”, he explains, “or worse still, paying 50 times more than the actual production cost”.
A certain kind of French luxury
That said, Cucinelli also strikes an optimistic note in his Financial Times interview: “I don’t think we should be worried. Many of these brands have solid foundations”, he says. “It’s not a tragedy if they lose 2% in a quarter—though I understand the stock market may feel otherwise”. Still, he doesn’t hold back in criticising his peers. “If you look at the financial results of Italian brands 20 years ago, profits were around 10%. Then came the French groups”, he points out, “and that’s when the boom began. We’re the only ones still making that +10%; profits for many other brands have doubled”. What’s the problem? “It means revenues have grown several times over. But there are no miracles: that can only happen if production volumes and prices increase, while costs go down”.
How should the customer react?
Cutting costs also includes lighter handling of contracts and subcontracting—something brought to light by recent investigations in Milan into illegal labour practices in the Lombardy supply chain, which also involved Dior Manufactures and Loro Piana, both owned by LVMH. “And when those stories hit the headlines”, he adds, “our wealthy customers feel cheated and stop buying. Can we really blame them?” But the issue also affects those whose supply chains haven’t been turned into legal files on a prosecutor’s desk. “Many wanted to chase those astronomical results: take Gucci, for example”, Cucinelli concludes. “It quadrupled its revenues in four years, but without any real logic”. The Umbrian entrepreneur suggests that between store openings, bold aesthetics, and successive leadership changes, the only real result for Kering group’s flagship brand has been “to flood the market with products and make the brand less desirable”.
Photo: Imagoeconomica
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